Solar panels – are they worth it?

How much can you really save?

Previously solar panels meant big bucks. But the Government has decided to end incentives for generating solar energy in your home from 31 March 2019. Solar panels will still help you cut your energy bills, but without the incentive payments, do the sums on solar panels still add up?

Solar panel need-to-knows

"Solar power? Hang on, we don't live in California!" True, but it's all about daylight, not sunshine. Panels can still generate some electricity on gloomy days, vital when the weather's as dull as watching paint dry.

Before you stick them on your home, understand these key need-to-knows:

Solar panel payments are ending

In December 2018, the Government confirmed its intention to end solar panel payments on 31 March 2019, meaning any solar panels installed after then won't receive payments for generating electricity or exporting it back to the grid.

If you already have solar panels, this won't affect you – you'll still get your payments. But be warned: if you're thinking of getting them, you'll likely be unable to get them installed and certified before the cut-off date.

This means the only benefit of getting solar panels is the savings on your energy bill, so it could take upwards of 70 YEARS to claw back your initial investment.

There are two types of solar panel

The type we're talking about is photovoltaic solar panels – also known as solar PV – which catch the sun's energy and convert it into electricity that can be used to power household goods and lighting. The other type is solar thermal, which allows you to heat water and can cut down heating bills.

This guide shines a light on solar PV, as that's where you can earn money through generating your own electricity through the 'feed-in tariff', as well as save on your electricity bills. According to the Department for Business, Energy & Industrial Strategy, well over half a million British homes have panels installed.

You need a south-facing roof

To maximise what your panels can make, you usually need a predominantly south-facing roof. If your roof faces south-west or west you'll still get some benefit, but it may be less effective and you might not get the maximum savings.

While some early or late shading from other buildings or trees is OK, your roof should be unshaded between 10am and 4pm.

You can still switch energy supplier

Don't, for heaven's sake, think this locks you into your energy provider so you can't get cheaper bills (join the MSE Cheap Energy Club to stick on permanently low prices).

The feed-in tariff is supported by a number of suppliers, as it's mandatory for those with over 250,000 customers. Ofgem has a list of all of them on its website. Yet you don't need your energy supplier to be the same as the supplier that pays your feed-in tariff, so you're free to switch around.

The further south you live, the more you can make

While you don't need a summer home in Hawaii to get some juice from solar panels, the further south you are can make a difference when it comes to their effectiveness. Remember, this is about daylight, not hours of sunshine. Northern homes get slightly less, so where you live needs to be factored in.

The Energy Saving Trust estimates that panels in Manchester could save you between £85 and £210 each year on your electricity bills, compared with around £90-£220 in London and £85-£205 a year in Stirling. See Does buying solar panels add up? below for full analysis.

Panels could push your house's value up or down

Some people worry that ugly panels plastered all over their roof could push the price of their house down. However, equally, a more efficient home generating its own energy may be more attractive to buyers.

Solar panels are a fairly hefty investment and might not be suited to those planning to move in the next few years – certainly you shouldn't expect a big upfront investment to be immediately reflected by a jump in your home's value.

Be wary that being tied into a contract that remains with the property once you've left could be unattractive to buyers, whereas a buyer's ability to benefit from the feed-in tariff once they move in might make your house more appealing.

Think about how visible the panels are and ask local estate agents for their experiences before installation. When we asked the National Association of Estate Agents for an overview, it told us:

Solar panels can indeed affect the value of a property, in both a positive and negative way. If the panels are new technology, show significant savings and are aesthetically acceptable, they may very well boost value. However, in some instances, the agreement which ties respective owners into old technology is onerous and could well affect the value of a property in a negative way.

If you get solar panels installed and later decide to move home, you can't take the panels or the feed-in payments with you.

Generally, feed-in payments are paid to the owner of of the property where the solar panels are installed, so normally when you move, the new owner will receive the payments.

While you could physically remove the panels from your old home and install them on the new one, you still wouldn't receive feed-in payments, as the panels would be considered 'second-hand' and so not eligible for the feed-in-tariff scheme.

It's also worth noting solar panel installations are tailored to each home – to fit the roof and positioned to maximise the level of sunlight they receive – so it's likely they wouldn't perfom as well if you installed them on a different home.

You shouldn't need planning permission

You don't generally need planning permission for solar PV systems. The big exceptions are if your property has a flat roof, is listed or in a conservation area. You might need to get approval from your council's building control team, so check with your local authority.

In England and Wales, the Government's Planning Portal says that panels are likely to be considered as "permitted development".

Solar panels are generally low maintenance

The Energy Saving Trust says little maintenance is required on a properly installed, well-designed solar PV system, though you'll likely need to replace the inverter – a gadget which is a key part of the mechanism – within about 25 years (£800ish).

Of course, though, things can go wrong. Check the installer warranty you get covers the 20 years you'll be getting the feed-in tariff. If the panels are damaged by something unexpected, like a storm, you may also be covered by buildings insurance – check with your insurer before you have them installed and bear in mind you may need to increase the sum insured.

Use your solar panels at the right time and you'll max their value

Once you've got your panels installed and they're up and running, make sure you make the most of them by using them at the right time.

For example, in the winter, when there's less sunlight and you'll generate less solar power, you'll take more energy from the grid. It's a good idea to set appliances to run while it's light outside, staggering them to max the savings.

Does buying solar panels still add up?

Whether they add up for you is largely down to the value you're paid back later down the line, through electricity savings or Government payments for generating electricity, and if that will cover your initial spend.

But be warned, the Government is set to end payments for new solar panels installed from 1 April 2019.

How much do they cost and what's the payback?

This is key. The price of a typical solar panel system, including installation, is about £6,200. In the scheme's early days, a system this size would have cost £10,000-£12,000.

There are a number of ways to recoup the outlay. Depending on the date it was installed and certified...

Electricity savings - for solar panels installed at any time. First and foremost, you can use the electricity your panels generate, thus reducing your electricity bills. The Energy Saving Trust estimates a typical 4kWp system can knock between £85/yr and £220/yr off your bill (kWp stands for kilowatt peak – how the power produced by panels is measured).

Savings depend on system size, electricity use, whether you're at home during the day to use the energy you're producing and other factors. If you can use more energy during the day when the panels are generating, you'll save even more as you'll need less electricity from the grid.

The 'feed-in tariff' - for solar panels installed and certified before 31 March 2019. This is money from the Government (but paid via an energy supplier) to households in England, Scotland and Wales for ALL the electricity they generate – whether they use it or not. The final rate before the scheme ends, is 3.79p/kWh (kilowatt hour). This payment is ending on 31 March 2019 to all NEW solar panel installations.

The feed-in tariff is income tax-free, guaranteed for 20 years and index-linked, so rises with inflation. The Energy Saving Trust estimates panels registered at a typical home can earn between £130/yr and £165/yr on average under the feed-in tariff, based on the final feed-in-tariff rates, and depending on where you live.

The export tariff - for solar panels installed and certified before 31 March 2019. This is a payment for energy you don't use that is sent back to the grid (unless you have an export meter, it's normally assumed 50% of energy produced is exported). The final rate before the scheme ends, is 5.24p/kWh (kilowatt hour). This payment is ending on 31 March 2019 to all NEW solar panel installations.

Can you still make your money back?

With the Government's decision to close the feed-in tariff scheme to new solar panel installations from 31 March 2019, it's much harder to recoup your investment.

All you'll get from solar panels if you have them installed now - as you'll almost certainly miss the cut-off date to get them certified if you start now - is the savings on your bill from generating your own electricity.

How much you'd save if you get solar panels installed after 31 March 2019?

AVERAGE ESTIMATED SAVINGS PER YEAR

TABLE_CELL_STYLE

London

Aberystwyth

Manchester

Stirling

Electricity bill savings (1)

£90 - £220

£90 - £210

£85 - £210

£85 - £205

Cost of system

£6,200

£6,200

£6,200

£6,200

Years to break-even

28 - 69

30 - 69

30 - 73

30 - 73

Correct at March 2019. (1) Savings vary depending on how often you're home, how much electricity you're using and when.

The Energy Saving Trust estimate that the average solar photovoltaic system costs around £6,200. Based on this, it could take almost an entire lifetime to recoup your outlay – well over TWICE as long as some solar panels will actually last (estimated to be about 25 years).

Of course, if you use more electricity – for example, you have a large house and/or you're at home during the day – then the savings MIGHT just about pay for the panels.

According to the Energy Saving Trust, someone in this situation living in London could make savings of £5,500 over 25 years (while in Aberystwyth and Manchester it could be £5,250, Stirling £5,125).

If you already get the feed-in tariff you'll still get payments

If you already have solar panels and get the feed-in-tariff, the closure of the scheme won't affect you.

If you had them installed and certified before August 2012, you're guaranteed to get the payments for 25 years.

For anyone who had them installed after this, you'll get the payments for 20 years.

If you managed to get your panels installed and certified before the end of the feed-in tariff, you'll see both bill savings and payments for generating and exporting solar electricity.

What you get depends on where you live, how much electricity you use and the size of your system. According to figures from the Energy Saving Trust, combined savings and earnings can amount to between £305/yr and £495/yr.

The rates you get under the feed-in tariff also change every quarter - our estimates are based on the final rates for January to March 2019.

Yet these are estimates for a typical house – plug your details into a solar calculator for a more precise estimate.

How much you can earn & save on average (before March 2019 changes)

INCOME GENERATOR

SAVINGS AND/OR EARNINGS PER YEAR

London

Aberystwyth

Manchester

Stirling

Feed-in tariff payment (1)

£165

£145

£140

£130

Export payment (1)

£110

£100

£95

£90

Electricity bill savings (2)

£90 - £220

£90 - £210

£85 - £210

£85 - £205

Total per year

£365 - £495

£335 - £455

£320 - £445

£305 - £425

Correct at March 2019. Payment scheme covers England, Scotland and Wales, not Northern Ireland. (1) Based on a 4kWh solar PV system. (2) Savings vary depending on how often you're home, how much electricity you're using and when.

Based on rates from March 2019, a typical London household could break-even in about 13-17 years, whereas in Stirling it's 15-20 years, though of course it depends on your circumstances.

How long would it take to break-even by region?

TABLE_CELL_STYLE

London

Aberystwyth

Manchester

Stirling

Total earnings and savings (1)

£365 - £495

£335 - £455

£320 - £445

£305 - £425

Cost of system

£6,200

£6,200

£6,200

£6,200

Years to break-even (2)

13 - 17

14 - 19

14 - 19

15 - 20

(1) Savings vary depending on how often you're home, how much electricity you're using and when. (2) You only get feed-in tariff payments for 20 years, after this all you'll get is bills savings – this is factored in to our calculations.

Back in the day, solar panels were a no-brainer. When the Government launched the feed-in scheme, people typically got a gobsmacking £1,100+/yr in payments. That cash was guaranteed for 25 years back then too, so that was at least £27,500 back – not taking into account electricity savings - though they used to be much more expensive to install.

The feed-in tariff isn't available in Northern Ireland. There was a similar scheme but this was closed to new solar panel installations in April 2017, so you can no longer get payments for generating electricity. The Energy Saving Trust still estimates you can get about £85/yr from export payments, and make savings of £85/yr to £210/yr on your bills, depending on how often you're home.

Depending on the cost of installing solar panels, it may no longer be worth it if you're thinking of getting them.

If you submitted an application for the scheme before 31 March 2017, you'll still get paid for generating electricity for the full 20 years.

Details on the Northern Ireland Renewables Obligation can be found on Ofgem's website.

How to install solar panels

If you think solar panels are still for you and want to get them installed, here's our key need-to-knows...

Finding an installer

Call local installers to get the best price. Both the system and the installer should meet the standards of the Microgeneration Certification Scheme (MCS). Get at least three quotes before deciding.

As we're MoneySavers, not electricians, picking installers isn't our speciality. You can see the firms shortlisted for the British Renewable Energy Awards 2018, run by the Renewable Energy Association, or ask friends and colleagues for local recommendations.

As always, get at least three quotes, and get 'em in writing. When comparing quotes, check the following are included: scaffolding, removal of the existing roof and other roofing works, internal wiring works, sorting out a connection agreement with the energy supplier, electrical connection work, and a generation meter.

Installation typically takes place up two to four weeks after you've booked with an installer. Bear this timescale in mind when planning what feed-in tariff you'll be able to register for.

After having panels installed, you might find that your electricity meter starts running backwards when the energy you haven't used is exported back to the grid. This is because some analogue meters don't have backstop built in to stop them winding the wrong way.

If you notice this happening, the best thing to do is to get in touch with your energy supplier so it can exchange the meter for one which is suitable. For more information, see this Which? guide to meters clocking backwards.

Make sure the installer is a member of the Renewable Energy Consumer Code (RECC). Plus, you've 14 days to cancel after you sign up to buy.

A Which? magazine investigation a few years back showed many solar companies were using dodgy sales tactics and giving poor advice to people looking to buy solar PV panels. The Office of Fair Trading also unearthed poor practice, so be vigilant.

Finally, never borrow from solar companies to pay for panels. Some installers let you buy solar panels on credit. If you don't have the cash upfront, paid-for panels aren't for you. The loan's interest could dwarf the savings.

Registering your panels

Previously, registering your panels was a must - you'd need a MCS certificate, which you'd use to register for feed-in payments with a licenced energy supplier.

With the scheme set to end, you no longer need to do this, but you may still want to ensure you use an MCS registered installer and apply for the certificate - as they install panels to a certain standard, and it may be handy if a future scheme launches to replace the feed-in tariff.

Pay with a credit card for extra safety

Pay by credit card for something over £100 and Section 75 laws supercharge your consumer rights. Unlike with debit cards, cheques and cash, pay in full or part (even just £1) on a credit card, and by law the lender's jointly liable with the retailer.

This means you have exactly the same rights with the card company as you do with the retailer, so if it goes bust, you can simply take your complaints there instead and get money back if no delivery. See the Section 75 guide for a full explanation.

If paying by debit card, there's also valuable hidden protection that means you may be able to get your money back if something goes wrong. It's called 'chargeback' and applies to most debit and charge cards, as well as Visa, Mastercard and Amex credit cards – though it isn't a legal requirement. See the Chargeback guide.

Tips to save £100s on energy bills

Solar panels are a big move. First, ensure you're on the cheapest energy tariff and do the energy-saving basics.

Switch energy provider

Ditch and switch energy provider and you can save £100s each year. Our Cheap Energy Club checks what you're currently paying and shows you the cheapest deals on the market. Plus we'll keep monitoring your tariff and the market to ensure you're always on the cheapest deal.

It's the same gas, the same electricity, the same safety. All that changes is the customer service and the price you pay.

Can you switch energy with solar panels?

Yes. You don't have to get your electricity supply and feed-in tariff from the same company. That means solar panel users can switch freely on Cheap Energy Club, just like everyone else. After switching, payments still come from the current feed-in tariff provider, so nothing changes.

If you want to switch to a different company that pays you the feed-in tariff, contact your feed-in provider to see if it's possible. Though, as feed-in payments are fixed and therefore the same across every provider, it may not be necessary. A full list of feed-in tariff providers – or 'licensees' – is on Ofgem's website.

There are more ways to cut energy costs, such as always paying by direct debit, which shaves £75 off your annual bill. For a full list of tips, see our Cheap Gas and Electricity guide. If you're on Economy 7, you can slash costs even further by using storage heaters, washing machines and dishwashers through the night. See our Economy 7 guide for full info.

Free insulation and boilers

The big energy providers are giving wads of freebies to people on benefits, from new boilers to insulation. It's because they have to help certain groups save energy.

New boilers alone typically cost £2,300, so this is a fantastic freebie. A boiler is a big contributor to your energy bill – so the more efficient your boiler, the more heat it produces from each gas unit. Depending on your old boiler's age, a shiny new efficient one could save you up to £300/yr.

Wall and loft insulation can slice up to £470 off energy bills per year. You could qualify if you get tax credits or income-based benefits, such as pension credit or income support.

Do the energy-saving basics

Sensible changes can save you large, from draught excluders to setting washing machines to 30°C, and low-energy light bulbs to notching down the thermostat. Get more energy-saving tips in our Energy Mythbusting guide.

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